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President Obama Signs HIRE Bill |
President Obama signed the Hiring Incentive to Restore Employment (HIRE) bill on March 18, a day after the Senate passed H.R. 2847 by a vote of 68 to 29. The House approved the bill on March 4 by a vote of 217 to 201. The two most important provisions of the HIRE Act are a tax credit provision and a limited “payroll tax holiday” provision, both of which encourage companies to hire unemployed workers in 2010. Other provisions enhance expense treatment for new equipment placed into service in 2010, extend eligibility for tax credit bond issuers, increase funding to highway and transit programs, create new anti-offshore tax abuse measures, and delay the implementation of worldwide allocation of interest. Details on this bill are available in the Tax Compliance and Reference database under E-Alert: Hiring Incentive to Restore Employment (HIRE) Act Passed.
On March 22, an IRS official announced that employers seeking benefits under the Hiring Incentives to Restore Employment Act (HIRE Act) must have their employees certify their eligibility for participation. The HIRE Act, which was signed into law on March 18, creates tax breaks for businesses hiring new workers and extends higher expensing limits for small businesses that make capital investments. Under the HIRE Act, employers can receive an exemption from Social Security payroll taxes for every worker hired after Feb. 3, 2010, and before Jan. 1, 2011 if that worker has been unemployed for at least 60 days. The new law also allows an additional income tax credit, up to $1,000, that is equal to 6.2 percent of wages paid for every new employee retained for 52 weeks. Workers will now have to sign an affidavit, which the IRS will provide to employers in the near future. Importantly, the IRS also released the latest draft version of the Form 941, Employer's Quarterly Federal Tax Return, for the second quarter of 2010, reflecting the changes for payroll tax withholding made by the HIRE Act. According to the IRS, there will also be a new Form 941 for the third quarter, which IRS hopes will also work for the fourth quarter.
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